European stocks could top record-highs, despite week's decline

European stocks posted their first weekly loss in five weeks on Friday, hit by ongoing turmoil in the Ukraine and disappointment in the lack of action from the European Central Bank.

However, markets remained near all-time highs and investors said they were watching closely to see if and when the upswing — which has seen the pan-European STOXX 600 Index gain 14 percent over the last year — could restart.

The interior of the Madrid Stock Exchange, or Bolsa y Mercado, is seen in Madrid, Spain.

The benchmark index hit an all-time high of 338.0 points last Friday, boosted by four weeks of consecutive gains.

However, the STOXX closed at around 333.2 on Friday afternoon — 1.2 percent lower on the day and 1.4 percent down on the week. This followed sharp losses at the start of week, caused by the West-versus-Russia confrontation over Ukraine, and profit-taking on Thursday and early Friday following ECB President Mario Draghi's news conference — which was slightly more hawkish than expected.

"The profit-taking was more about Mario Draghi than Ukraine," Brenda Kelly of IG Group in Dublin told CNBC.

"We saw a little bit of hawkishness from Mario Draghi – we were mostly expecting to see a degree of dovishness, and some element of non-sterilization (of the ECB's funds that it has spent on purchasing government bonds)."

She forecast the STOXX would continue to target the 338.0 level, and could rise still higher.

"It's certainly possible. What is most likely to happen in the immediate near-term is that we will see a bout of profit-taking… in case the crisis in Ukraine escalates," Kelly said.

Ishaq Siddiqi, market strategist at ETX Capital, predicted that European stocks would rebound come Monday, but that prices would then drift.

He said European markets looked "pretty exhausted," particularly the German Dax and to a lesser extent, the U.K. FTSE 100.

"I don't see a significant upward move for European markets just yet," he told CNBC. "We have to get past the geopolitical tension (in Ukraine) and get some more incrementally positive data out of the euro zone."

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In the meantime, stronger-than-expected employment data out of the U.S. on Friday failed to halt the European stock decline for long. The data showed that job creation accelerated in February to 175,000 positions, much stronger than the 149,000 expected. However, the unemployment rate rose to 6.7 percent from 6.6 percent.